In a move that could bring significant resources to the exchequer, the Cabinet Committee on Economic Affairs approved, the listing of five public sector general insurance companies on the stock markets, with a plan to divest 25% of the Centre’s stake in each of them over time.
The companies whose stake would be offloaded, as per stock market watchdog Securities and Exchange Board of India’s listing norms, are :
The New India Assurance Company, United India Insurance Company, Oriental Insurance Company, National Insurance Company, and General Insurance Corporation of India.
Implications of listing the companies to stock exchange
1. The idea is once the insurance companies get listed on the stock market, the prospects of the industry go up and insurance becomes better known to the common man.
2. Public shareholding in Government-owned companies is a means of ensuring higher levels of transparency and accountability in functioning of these insurance companies.
3. It gives an opportunity for the public as well as employees to have a stake in the company’s fortune.
Details of listing
As per the listing conditions for equity markets, the minimum public shareholding has to be 25 per cent, so the government's shareholding will be brought down from 100 per cent to 75 per cent.